The World Bank LPI (Logistics Performance Index) 2010 has just been released. This snapshot of selected performance indicators in nearly 130 countries demonstrates clearly the correlation between logistics performance and sustainable economic growth. This year, the analysis of this bi-annual Report has been expanded to include information on the time, cost and reliability of supply chains. Detailing several major advances since 2007 in places like Brasil, Columbia and Tunisia the report highlights clear potential for low and middle income countries to boost trade performance by 15% through faster, cheaper and more reliable trade logistics – if the analysis is acted upon. Here, we build from the LPI 2010 Report to explore potential to develop a Transformational Logistics perspective to sharpen the analysis of logistics relevant to the emerging and developing world.

The missing link?

 

 

History is written by the winners and, similarly, many Retail and Logistics textbooks are written from the perspective of developed economies and, as the LPI highlights, key segments of the global logistics industry are dominated by no more than 25 large corporations – especially in the maritime, port and air freight segments. This contrasts starkly with the fact that 85% of jobs in the USA and 65% in the EU are generated by small to medium sized companies and in the majority world – that is 75% of world population – few jobs are even formal or covered by regulatory and welfare schemes. Few workplaces are even covered by legal title and health and safety is a pipedream. Conventional Logistics analysis just does not grasp the essential asymmetrical (informal / formal) nature of global sourcing, value addition, distribution and points of purchase. We see Transformational Logistics (and retail) being a better way to describe reality in the emerging and developing world. (more…)

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Sixty years after the United Nations signed the Declaration of Human Rights, meetings were held in Paris during December 2008 between UN officials and Business Leaders to explore ways to widen the scope of the Human Rights agenda.

In an interview with France 24 Mary Robinson, former President of Ireland (1990-97); former UN High Commissioner for Human Rights (1997-2002) and now leader of the Realizing Rights Group focussed on ethical globalisation initiatives, spoke of broadening the Human Rights agenda to include fair trade; the plight of children in the workplace; the empowerment of women in political and business circles and above all Action Against Poverty. Logistics and the Supply Chain figure in each of these issues.

Celebrating the fact that over 230 companies worldwide have become involved in this initiative, Mary Robinson said: “I am encouraged to see more and more companies taking a public stand on human rights. This is yet another sign that human rights are becoming part of the mainstream business agenda.” (more…)

The informal economy is no small constituency. According to Hernando de Soto’s research the informal economy over the past 40 years has generated US$10 trillion of wealth, a value nine times greater than all bilateral foreign aid and forty times larger than the international development loans received by underdeveloped nations, and a value larger than the size of the worlds twenty largest stock markets. Statistics on the informal economy are by their nature unreliable but the sheer scale of opportunity merits attention. (more…)

Clearly, the Last Mile video (see below) has struck a chord in many places all over the developed, fractured and emerging world. Many thanks for the comments. More has to be done on infrastructure. However, several commentators stress that this is only part of the story. What about the roads to the marketplace and the perils beyond the potholes… (more…)

There are villages of West Bengal where the rural economy hinges on one or other particular activity. One cluster of craftsmen churn out wigs, another lights, another polo balls, another boats and another jeans.[i] Porter (1998) defined clusters as “critical masses in one place of linked industries” as the basis for competititive advantage and all over the world this specialisation is a feature of the informal economy. In fact, industrial clusters are a common rather than an exceptional form of development in India and elsewhere. What role does the informal economy play in cluster development?

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A fresh perspective is needed to see emerging markets referring not only to a growing economy but to a new kind of economy based on information, technology and knowledge. And the same applies to the informal economy where a more inclusive approach is needed to rescue it from simplistic notions of the informal and formal world operating as functionally independent entities with opposing legal status. [i] No longer is this to be trapped in perceptions of criminality adding fuel to a variation on a theme of Huntington’s Clash of Civilisations. There is more to be gained from synergies between the informal and formal markets and this paper sees Logistics as having much to contribute to this perspective.

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As De Soto’s work illustrates, restrictions on economic activity imposed by the bureaucracy and the sheer inertia of the formal banking and legal communities make any scale up into the formal sector all but impossible. In a widely cited experiment, the De Soto team tried to legally register a small garment factory in Lima, Peru. This took more than 100 administrative steps and almost a year of full time work to achieve.[i]     


[i] Hernando de Soto, The Other Path (1989)